US legislation lowers excise tax for brewers

The Tax Cuts and Jobs Act, passed by Congress this week, has had a knock-on effect for drinkers, lowering federal excise tax for breweries, wineries and distilled spirits producers.

Within the Act is the Craft Beverage Modernization and Tax Reform Act (CBMTRA) which will see federal excise tax on beer reduced to $3.50 per barrel (from $7 per barrel) on the first 60,000 barrels for domestic brewers producing less than 2 million barrels annually, and reduced to $16 per barrel (from $18) on the first 6 million barrels for all other brewers and all beer importers. The bill maintains the current $18 per barrel rate for barrelage over 6 million.

In total, this represents more than $142 million in annual savings, which will allow America’s small brewers to reinvest in their businesses, expand their operations and hire more workers, according to the Brewers Association.

The effort to bring meaningful federal excise tax relief to small brewers has been a primary political objective for the Brewers Association for almost ten years. The group has played a central role within the beverage alcohol coalition, advocating for this historic change in public policy.

Export savings

Nor surprisingly, the move has been welcomed over here by the British Beer and Pub Association, which has a long-term mission to reduce what are considered to be excessively high levels of beer duty.

The changes in the US will save British beer exporters £7.2 million — taxes are being reduced by $2 per US barrel for all brewers exporting to the US from the UK. The UK exports 3.4 million barrels to the US each year — it is our largest export market.

BBPA chief executive, Brigid Simmonds, said: “US small brewers still enjoy tax advantages over UK brewers. When they export to the UK, they receive all the advantages of the UK’s small brewer relief, yet the Federal discounts offered in the US are not available to the UK’s small brewers.

“This is something we tried hard to correct through the US / EU negotiations on [the Transatlantic Trade and Investment Partnership] and would like to see tackled under any forthcoming US / UK trade deal.

“We must, however, congratulate the US Beer Institute for all their work to achieve reductions in beer taxation and for their co-operation with us to help UK beer exports.”

Mike Benner, managing director of the Society of Independent Brewers (SIBA), added: “SIBA would like to congratulate the Brewers Association for their achievement in securing tax relief for Americas independent craft brewers. The positive effects of Small Brewers Relief are still evident in the UK some 15 years after it was enacted and it is excellent to see the Government, on both sides of the Atlantic, supporting independent craft brewers.”